Awakening Trumpet

We are deeply moved by watching ordinary people doing extraordinarily in course of our Strategy development workshops. Little achievements of the key members (ordinary people) having profound effect on the business leaves us in disbelief. We are glad to watch the changes in their outlook about the business. But, we are regretting that only a small percentage of business owners / teams dare to leave their accustomed way of thinking and catch the growth mindset. One of the major mindset is to expand the production facility, or increase number of sales outlets, or increase man power, etc. 

Most  organisations operate on the assumption or formula that more resources / facility equals better business. They invest a large financial capital in upgrading, expanding and improving resources. Of course, resources matter to accomplish organisational feat. But the mindset for growth matters more than resources.  When you look around the companies that grow geometrically; in spite of meager resources, they thrive with their outlook. Often mindset trumps the resources bank; it sets businesses apart. It help

s the leaders to navigate the right path, irrespective of the circumstances the organisation is having. Mindset can be acquired with right kind of facilitation. A look back on the clients whom we have served indicate, it is sheer mindset that helped them to reach a growth path. The wake up call to every Small and Medium business is to see the market before they spend or acquire costly resources.  Resources may become obsolete faster than the returns it can provide. Many times simplest of the ideas lead to big breakthroughs, but the ideas stick only if there are right mindsets. 

contributed by Sasikanth R Prabhu

Profit and Profitability

Many incidences we have faced in our strategy workshops, where we have to explain the difference between profit and profitability. Yogesh Jain of Niche Quality Systems Pvt Ltd, who is partnering for the DNA development service in Indore region has witnessed most of the confrontations related to profitability.

The question, what is the aim of doing business? Elicits an immediate and instinctive answer… ‘to make profits’ from most of our workshop participants.  Anything other than profit seems to be unthinkable for both business owners and managers.  This is the point where we struggle most to make the key players of the business think beyond profit.  One aspect that we push them to go beyond profit is ‘profitability’.

When we say that ‘profitability is healthier measure of business than profit’ is not welcome by most of the business owners, partially because they do not understand the difference between these two and due to the sentimental attachment they have towards the term ‘profit’.  

Why this strong sentiment?  We feel …….because everyone in the company pays attention to profits. Most of the key business teams have a revenue / budget / profit plan, each department / functional head owns an important element of that plan and progress is watched closely by them in the review meetings.  All managers work strenuously to meet these targets. Yet, even if each manager meets the budget targets, the company seems to be a lot less profitable.   

I remember sitting in a review meeting of a distribution company several years ago. The business owner of the company sat at the head of the table and looked at the four to five managers sitting on both sides of the table. Each manager, in turns began..’ here are my numbers’……. After presentation, they had discussions on implications of the numbers presented and finally all adjusted their numbers and a consensus was reached. This was the half yearly plan.   

In the following quarter the Sales manager grew the top line and met his quota. An additional sale came from new customers who ordered frequently in small amounts. The gross margin on these orders did not cover the distribution cost. Other customer ordered products that were out of stock locally and had to be couriered from other regions.

Two things were noticed in this situation. First both the Sales manager and the Logistic manager were on target; the sales manager grew revenues and the Logistics manager met his target because his budget was based on an average cost that allowed these inefficiencies with a hope on future business. Even though these managers met their numbers they failed in managing the profitability.

Second, these uncommon sales and orders could have been made much more profitable through some very simple business oriented twists, which would have benefited the customers as well as the company. These twists require only a business acumen and execution - not extra financial capital. Our strategy workshop highlights this point to a large extent.

As a discipline, we need to see Profit and Money as two different things. It is certainly possible for a firm to make a huge profit and have no money. It is equally possible that company is flush with funds but is suffering from losses.  What happens when an organization shows a profit?  There will be a line of people standing in a queue waiting for a share of profit.  Some organizations get into trouble because they don’t make profit. And others get into trouble because they make profit.

But successful businesses stand on two pillars. One: the ability to generate profit. Two: the ability to manage cash flow. Managing cash flow is very much related profitability. But this is missing in most of the companies… profitability is unseen and unmanaged!

 Contributed by Sasikanth Prabhu

Closing the perceptual gap in the organisation

As part of the struggle to communicate, what benefits a company will get if they engage us, we offer a
sample session. The hazard of this session – Business Facilitation- is in the initial phases of our engagement. The people in the organization tend to scrutinize / evaluate us to death. After every sessions of two hours the client has a sub-conscious tendency to look for’ what did we gain today?’ Or ‘did we get what we have paid for?’ ‘Did we get anything new?’ Etc.etc.

What we have observed is that always people crave for new knowledge, new ideas, new paradigms, new models. And the attempts for these cognitive acquisitions actually neither solve the issues at hand nor place the company in a better business position. If the participants do not get something new, they get disappointed and the halo about our services also gets affected. Actually our programs are not meant to teach or enlighten about new knowledge but to bring perceptual changes and shared understanding, which unfortunately is not observable, articulable but have significant effect on the collective efforts of the company.

Different groups within an organization can have sharply contrasting perceptions of organizational aspects. For example, while senior executives are twice as likely as any other group to view their company as “resilient,” nearly 60% of line managers, mid-level managers, and business-unit staff describe the same organization as unhealthy in some respect. And though senior managers tend to feel positive about their involvement in operating decisions, many junior managers in the same company feel that senior managers “micromanage” or “domineer.”

Such perception gaps pose a serious organizational climate. Yes, we all want confident, optimistic organizational citizens. But if people within a company can’t agree on the state of its affairs, they can’t accurately diagnose problems or design and execute solutions for them. In our initial phase of our engagement, we dig out the dirt in the organization and try to close the perception gap.

 We make them acknowledge that different people have different perspectives on the organization’s matters. We allow the participants from different groups / departments to share their views—and the reasoning behind them. Sharing their views with others, backing them up with the data they have used to form those conclusions etc.. Our goal is….to compile a more complete picture of the organization. Also encourage honesty and acceptance in the group. We help them describe what’s actually happening in their organization. This process brings into light the real naked issues of the organization. This makes them realize the wrong ride they are taking. We are sure that mere awareness about the prevalent conditions can help managers and staff form a more objective impression of the organization’s health and help them build readiness for change. This feeling is the most important to bring about changes in strategy and organizational development. But alas! The immediate effortless change in perception is not considered to be a gain and the human mind craves for more knowledge…

Contributed by Sasikanth Prabhu

Visioning

Now we have facilitated visioning exercise of more than 50 small businesses. Recently we did visioning program for a Automotive parts manufacturing Company in Dewas (Madhya Pradesh). This company was introduced by our friend Yogesh Jain who also became an ardent follower of School of Strategy and he runs his organisation Niche Quality Solutions Pvt Ltd (http://nicheqs.com/), which has long experience in providing Six sigma, Quality solutions to organisations in and around Indore. An year's experience in strategy workshops have given him an opportunity to develop an unconventional perspectives on business growth. He says " I have attended many management programs organised by institutions such as IMA.... but the business strategy workshops are different and they really add value to the organisation. There is a sense of fulfillment in taking part in these sessions". It is wonderful to work with him now... ...

During the meetings with business owners the question that comes up a lot in the work we do is the difference between vision and mission. At times we come across companies which do not bother to distinguish them at all: but...They have a separate Values Statement (thank goodness), but if you ask them to tell their Vision, and then their Mission, they’ll give you the same answer for both questions. So what is . difference? Does it matter? Yes it does! we will see visioning here .

• A strategic vision is usually thought to be solely future oriented. A vision provides an organization a forward looking, idealized image of itself.


• Moves outside the usual assumptions.


• Concentrates on the end goal, not the means to reach the goal.


• Followers gain ownership by developing the means (action plan).

Another benefit when done together with the people in the organisation is shared vision, which includes a present component.

• Vision is not a destination, but an intangible structure that surrounds us and guides our daily activities. From this perspective, a shared vision is a form of self-identity.

This definition of vision is a collective belief in what the organization can become. In this way it is similar to a truly desired wish for the future. If the vision is sufficiently broad it is enough for providing a framework for current decisions.

Regularly feedback can be employed for both corrective action and vision revision (interesting combination of words). If the feedback indicates a problem in the implementation and nothing amiss in the expected vision then the strategy and/or tactics can be altered to get back on track toward the vision. And if there is an indication that the vision is no longer realistic there is no problem with a shift in vision to a more workable vision. Normal planning cycles allow for such a step on an annual or half yearly basis.

ImplicationsWhat is unique about the organization's self-concept of itself? Something that would be missed if the organization were not to fulfill this vision.

What issues might arise among different stakeholders as this vision is realized?
Are organizational practices aligned with the vision? Are desired actions reinforced by performance metrics?

Putting an organization’s mission & vision in place requires working at all levels of the organization. Often, the effort is only made at the top of the organization with the expectation that employee commitment will follow. This assumption is far from true. It is recommended that a specific change program be put in place to develop a shared vision and common understanding of the organization’s vision and mission.

Characteristics of Strategy meetings with the key people of an organisation (Part 1)

By now I have facilitated more than 100 sessions on development of Business strategy and I see some common occurings / patterns in most of the sessions. The observations and experiences are given below.......

• The development of suitable / appropriate strategic options often require novel perspective. Catching the novel perspective sometimes is the most difficult and time consuming part in strategy devlopment


• Many in the organisation view strategy and execution are two different and sometimes even go to the extent that they cannot co-exist.


• Real strategy making requires inputs and contributions from various members of the team. But the top management has the tendency to act as an apex body and take a stand point 'do as I/we say ". This disconnects many employees from the business.


• Strategic information is often forgotten amidst new information pertaining to daily operations. This makes people to be fire fighting than doing the important.


• Many times it requires the key people to make difficult decisions, which they postpone thinking better decision can come as time passes by.


• Many important key points need to be taken into account from the business perspective. But many key people think only in specific functions such as finance, production, accounts, sales , HR etc. They think of doing the job well and not winning the business.


• There is gross disagreement exists among key players on basic assumptions regarding the future of their business.


• The strategy need to be communicated to the employees convincingly, but little time and effort is spent on making the strategy simple to communicate.


• Difference of opinion among the key players regarding the strategy escalates into personal conflicts at a later stage.


• The key players fail to help the employees feel that strategy is something worthwhile to pursue, to identify and to feel proud of.

contributed by : Sasikanth Prabhu

Unconventional Learning Program

Today, one positive thing is that the top management has begun to recognize the promise of sustainable growth hinges on the human beings (the key people) and not the technology or finance. Their key people’s knowledge, understanding and learning are the organization’s sacred assets. When it comes to breathing life into strategic initiatives, the key people are the ones who hold the power.

Creating a “learning oriented organization” to fulfill the growth needs has proven to be devilishly difficult.

If we read through the media we find that, the quest for employee-driven business growth is reaching a near-feverish pitch. Many organizations are looking for programs that will guarantee people’s commitment and engagement in the organizations goal. Often, sought after programs are Certifications, Computer based learning, Soft skills training, Offsite simulation programs etc. We have even found that some companies are intoxicated in conducting such programs.
Recently we asked one of the business owner of a Rs.40 crore company owner (our client too), what role does he play in the organization primarily. He said he spends a lot of time in HR development, developing people skills and attitudes. He is of the opinion that only if people’s attitude change he can go for business expansion / growth.

Sure, such programs are sexy and create a surge in the enthusiasm of the participants. But they are, after all, merely tools that offer no magic on their own. In factual terms, they do not seem to generate knowledge, commitment or enthusiasm in a sustainable way. For getting employees’ commitment and application of their skills the top management needs to begin the process elsewhere.

The challenge, here, is not “how do we get employees to learn.” Rather, it is “how do we create a situation in which they can use their own powerful and innate abilities to apply.” Notice the important difference between the two orientations. Organizational training ceases to be something we “do to” employees.

Instead, facilitators become triggers of a latent, collective power that may be harnessed and directed towards our organization’s shared goals and aspirations. The equation is simple. To unlock the power of widespread transformation, simply embrace some new assumptions. Immerse learners in experience. Welcome mistakes. Discover what works. Apply it to reality.

Though this later method of promoting learning in the organization is effective and invaluable, but the challenge is…. this service of learning facilitation is difficult to sell and it doesn’t have the boundaries and content structure of the other learning tools. The decision maker himself needs to be a learner and go beyond his/ her own thresholds of fear to subscribe for this method.

It is worth taking the risk…. The outcomes are unpredictable but valuable sustainably.

contributed by Sasikanth Prabhu

Possible causes of productivity problems in India (More of Kerala)

Macro Issues

Micro Issues

Economical · Inflation / recession · Excessive defense spending · High Energy prices · Subsidies to inefficiency · Imbalanced wealth distribution · Government too high a percentage of GNP · Unhealthy ratio of export to import · High technology cost · Unaffordable cost of living Agriculture & Industry · Insufficient /ineffective research and development · Exploitation of farmers · Lack of developments in product quality Governmental · Inappropriate and impractical legislations · Bureaucratic delays · Enormous paper work · Governmental waste · Low government productivity Societal · Discrimination based on caste, religion and language · Wasteful habits · Dishonesty and corruption · Frequent family conflicts · Transition from joint family to nuclear family · Increasing crime rates · Unhealthy public habits · Rioting tendency · Lack of constructive politics, resorting to mud slinging Education · Irrelevant curriculum · Not appropriately linked to career and occupation · Lack of commitment and efforts from tutors · Lack of facility and amenities · Excessive thrust on criticisms and analysis · Lacking creativeness, construction and synthesis Health · Undernourished / unhealthy diet · Stress Frequent incidence of epidemics Labour force characteristics · Low education standards · Adversarial relations with private sector · Poor work ethics · Pilferage · Tendency for strike and Unionism · Insensitivity and indifference to the management · Lack of loyalty to the organisation, business and occupation Psychological · Lack of motivation to achieve · Low self esteem · Improper communication styles Irrational cognitions

Organisational · Insufficient / Obsolete machines & plants · Misfit staff · Faulty structure · Discouraging and oppressive culture Business · Ventures without mission, vision, strategy and resources · Lack of understanding about market needs and market segment · Unfair pricing · Too much dependence on foreign technology & know how · Short term focus · Inappropriate risk taking Management · Inattention to operations · Inattention to quality · Excessive analytical management · Resource wastages · Inattention to human factors · Excessive executive pay · Lack of synergistic relation with vendors, suppliers and customers · Attempt to dominate other management functions · Adversarial attitude towards unions · Excessive attention to legal issues and paperwork · Resistance to change Unions · Insensitively asserting union rights · Featherbedding (getting paid for services not performed) · Rigid job classification · Adversarial attitude towards management · Pay greater than productivity · Keeping output low deliberately Employees · Preference for leisure time · Resistance to change · No pride in workmanship · Poor work ethics · Focus on pay and wages than on work · Improper utilization of wages earned · Self centeredness and tendency to take bribe · Unhealthy habits · Attitudinal problems with work · Laziness, negligence, indifference, arrogance

Productivity

Classical definition: Productivity is the ratio of output to input. Productivity means that more is produced with the same expenditure of resources.

According to Bernadine, H.J and Kane, J.S (1993) Performance appraisal: A contingency approach to system development and evaluation.

Effective performance (productivity related) at the individual or aggregated level can be defined according to six criteria.

The most effective employees or work units are those providing the highest possible quantity and quality of work at the lowest cost and in the most timely fashion, with a minimum of supervision and with a maximum of positive impact on co-workers, organisational units and the client/customer population.

Another conceptualization posits simply effectiveness and efficiency, with effectiveness defined as meeting or exceeding customer requirements and efficiency defined as meeting those requirements at the lowest cost possible.

Contributed by

Sasikanth R Prabhu (November,2002)

Building Social Capital - the collective feeling of 'We'

When we interact with the organisations in the initial phase of our facilitation , it most often becomes evident that people in the organisation build their plans and strategies of business on the assumption that others in their firm are ready and willing to be team players, act collectively to create or achieve something in the future for the organisation.

The observation, however, is that most often the organisation operates in a fragmented way. The technical people are pulling the resources in one direction, the marketing guys demand better attention to their requirements, finance have seemingly lopsided approach to their allocations and HR brings their own issues unconnected to business. The very resources meant for growing the business are pulling it apart.

In spite of these experiences, organisations are in the habit of assuming that once a good strategy is evolved at the top, people in the organisation will readily act, participate and contribute in a focused way according to the new found strategy.

An orchestra that is ready to play the same song does not come into being naturally but have to be worked out. Similarly every organisation has to create a pre-condition of shared understanding and shared commitment as they build the strategy. This is what is building ‘social capital’. This capital is the most prominent for a business organisation in the modern scenario and is even more scarce and important than the financial capital.

It is quirky to identify and create collective feeling of what “we” (i.e., the firm) should do if there is no strong sense of “we” – a mutual commitment and sense of group loyalty and cohesiveness. Similarly, it can be meaningless if the members of the firm are not committed to go on a journey together into the future.

Most organisations are clueless on how to create such feeling of ‘we’ the collective intelligence or the social capital. One attempt by many organisations to build social bonding is to celebrate the birthdays / anniversaries of the employees or having cultural get together etc on occasions of public festivities such as Onam, Christmas, Diwali etc. Secondly, on encountering inter-departmental turmoil, interpersonal conflicts and other employee behavioral issues, mostly companies resort to training programs on team building, leadership, communication skills, interpersonal skills, etc to the employees. Even after several training programs the conditions in the organisations do not improve which leads to cutting training budgets, snipping certain employees (even though they are valuable to the business), restructuring the organisation, abandoning the attempts to improve with ‘we-have-to live – with it’ attitude etc.

Actually there may be nothing wrong with the employees or with strategy or with the intentions of the business owners. The fragmented functioning in the organisation is somehow subtly connected with the view of ‘big picture’, a shared understanding and the commitment of the people in the organisation. These three are essentials for an organisation to work effectively. Training is not the solution, neither impersonal communications aides such as bulletin boards, manuals, sign posts, websites or awareness building programs. Top management fiat also is not effective in this situation.

But it is possible to develop a social architecture suited for each business / organisation. The only way known now is to lubricate the wheels and gears of existing social system. The traditional meetings need to be converted into animated dialogues. A facilitator who has the knowledge and skill of handling the group dynamics may be engaged to bring together the diverse stakeholders and facilitate to bring out the shared understanding and commitment. Engaging a facilitator for organisational planning is quiet unconventional, but it is needed and there is no other way known how to tackle the organisational fragmentation.

contributed by Sasikanth Prabhu

Organisational education

In future, the organisations must have its own academy to promote contextual education.

Education means ......

Education is to mould the behaviour. It has three functions – to promote originality (free will expression, innovation and creativity), to develop competence for occupation (knowledge, skill and attitude), passing on a time tested culture (beliefs, habits, value, assumptions etc).